Monday, October 6, 2003

Shares of MedImmune edged upward this week as the Gaithersburg biotechnology company expanded its product testing and reported higher sales.

The Food and Drug Administration in September approved MedImmunes plan to move forward with clinical testing of Synagis, which treats infant lung infections.

The approval comes as MedImmune rolls out its nasal mist flu vaccination, FluMist, for adolescents and adults. Wal-Mart Stores Inc. already has begun selling FluMist in some of its stores.

MedImmune, which employs 700 in the Washington area, has forecasted FluMist sales to hit $120 million to $140 million this year.

In addition, the company is asking the FDA to allow preliminary human testing on Numax, another product designed to prevent serious respiratory syncytial virus, the most common respiratory infection in children.

Early studies show Numax may be 20 to 100 times more potent than Synagis, said company spokeswoman Jamie Lacey.

Still, analysts are mixed regarding the companys performance.

“The near-term growth driver for MedImmune is really FluMist. Synagis is a great product but its still maturing in the market,” said David Hines, research director of Avalon Research Group Inc., an independent equity-research boutique in Boca Raton, Fla.

Mr. Hines, who does not own any stock, is advising investors to sell their MedImmune shares, rejecting Wall Streets expectations for FluMist.

He argued that FluMist, which is twice as expensive than regular shots at $46, is not marketed for its original targets, young children and the elderly.

The product is suitable for people aged 5 to 49.

But Craig West, a senior biotech analyst at A.G. Edwards & Sons Inc., a St. Louis brokerage firm, said MedImmunes products fit consumers convenience demand.

“There are at least 4 to 5 million people who are convenience-driven and will pay higher prices for FluMist,” Mr. West said, advising investors to hold their stock.

Mr. West, who does not own company stock, said he is concerned that MedImmune has earmarked less revenue this year for research and development.

The company spent $28.9 million in the second quarter ended June 30, a 16 percent drop from the 2002 second quarter.

Ms. Lacey did not comment on analyst concerns, citing a “quiet period” MedImmune has entered into after filing its earnings for the third quarter, which will be released Oct. 23.

In the second quarter, sales jumped nearly 50 percent to $85.8 million from $57.3 million in 2002 quarter.

MedImmune posted profits of $13.4 million (5 cents per diluted share) that quarter compared with a loss of $29.4 million (12 cents) a year earlier. Diluted earnings reflect the value of convertible warrants and stock options.

Philip Nadeau, a biotech analyst at SG Cowen Securities Corp., projected the stock to top $40 by 2004.

MedImmune stock, which has been trading in the mid-$30 range, closed yesterday at $33.13 on the Nasdaq Stock Market, up slightly from a week earlier at $32.78.

“Indicators show FluMist is going to be a good product that will direct MedImmunes growth for the next couple of years,” he said, rating the stock a “strong buy.”

Mr. Nadeau does not own any MedImmune stock.

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